Use these six questions that are deceptively simple to guide yourself through the hardest part of planning your pricing strategy. What’s the hardest part? I’ll give you a hint: tackling your price list is NOT the first step — or the biggest problem!
In my experience, when photographers complain about pricing problems, their complaints aren’t really about pricing. The real problem is that their profits aren’t a good reflection of the value clients are getting or the amount of time and energy that the photographers invest. To say it another way, the photographers are getting the short end of the stick and they’re not sure what to do about it.
I challenge you to consider this issue for your own business. Take some time to think about these six questions, and I guarantee you will gain focus, clarity and insight that your business will benefit from — no matter where you’re at now.
Where do I start?
When will I feel like I’ve achieved success?
What do I want to pay myself?
How do I want to get there?
What do I do about the actual price list?
What do I do going forward?
Pricing for Profit
And remember, this is just a start. There’s more information available in my free pricing booklet. But for now, let’s start down the road of clarifying your pricing and your business.
1. WHERE DO I START?
Three of the most basic pricing factors for any business are:
a.) The expense of the product.
b.) How much you pay yourself.
c.) The time you spend on the product.
For the most part, the first item is determined by outside factors; you can do your research to compare price and quality. We’re skipping right past that here, although I am assigning that as homework later!
The second and third items [(b.) and (c.) above] are what we’re talking about today. The way they’re stated here, these factors are deceptively simple. However, so much goes into them.
For example, your client base can be a huge determining factor in the level of time and energy the end product requires. And if you take a closer look at how much you truly want to pay yourself, you might realize that you are motivated by at least a few hidden goals. What you pay yourself (and if you’re not paying yourself, you need to) is determined in large part by what you want your business to do for you and/or your family.
Considering these crucial pieces of information will go a long way toward making your business a profitable success. You should think about this stuff before you type anything up for your pricing list. Let’s get started doing this … the right way!
2. WHEN WILL I FEEL LIKE I’VE ACHIEVED SUCCESS?
The wrong approach:
Using the default idea of success, which is wanting the maximum amount of money that can possibly be made with vacations included. Giving little thought to what qualities define a ‘successful’ life to avoid thinking of failure.
Why it’s so important:
The problem with this approach is that without really considering what success means as a photographer, there’s also less chance of reaching it. Remember, your time and effort should bring something home. But what is it that you want to go home with? That’s what you need to know. Make sure you are working toward something, not just working so you can worry more.
Note: You’re not trying to find one formula for success that will last forever and ever. Definitions change over time because lives change over time. That’s normal. But start somewhere!
What I want you to do:
Take some time to sit back with a glass of wine (or beverage of choice — if you have a spare glass of butter rum chai handy, send it my way) and meditate on the financial and life circumstances in which you would feel comfortable and secure. I’ve heard tons of different answers from other photographers, including:
6 months of household expenses in savings
a particular amount of money in the bank
a retail location with a specific number of regular clients
the ability to hire an additional photographer or photographers to limit my shooting time to the cream-of-the-crop clients and still make money
a paid two-week vacation for my family over summer break (note: not wanting to claw your way to the very top is perfectly okay. If your goals tend toward smaller rewards, own it! Be real!)
shooting nothing but the newborns/seniors/whatever kind of session I love shooting
Normally, I have a strictly-enforced rule about not looking to other businesses for ideas about how to run your own business. After all, you have no idea if they’re profitable! However, I’ll make a limited exception for those of you who are having trouble getting started on this mind quest. If it helps, think about other photography businesses that you know about — the ones you are envious of. Now think about what they have that you want. Going down that road in your mind might help you clarify what standard you are using for success. But again, remember that you’re planning for actual success, not just the appearance of success.
3. WHAT DO I WANT TO PAY MYSELF?
The wrong approach:
Taking what’s in the bank, paying out what’s owed, and then taking home what’s left.
Why it’s so important:
All too often, I see photographers charge whatever they think the market will bear, and then end up at the end of the month with nothing to show for their effort. I was doing this same exact thing early on in my own photography career to some seriously unhappy results. You might recognize one of the symptoms I was seeing:
not meeting the outside costs associated with having a job. In other words, losing money by working
feeling helpless and frustrated because other businesses were steering my ship, not me.
having a family who was counting on revenue they weren’t getting. And they weren’t getting it because everyone was a priority before they were.
That covers the lowlights of the experience I was having, but the list goes on. I’ll summarize: It sucked. That had to change. Happily, it did. But only when I took action and did what I’m about to tell you to do.
What I want you to do:
Don’t guess that you’ll make money; don’t hope that you’ll make money; PLAN to make money. Until you do, your business’s default mode is “give time away to other people.”
Use your goals for the business to set the take-home pay you would like to receive (at least at this point; again, things can change over time), divide that amount by 12, and factor it into your monthly expenses. If you expect to pay yourself first, you will force yourself to start charging what you are worth.
Then keep going. Divide that monthly income by 4 to get a weekly number, and then divide by the number of hours in a week you want to work. You’ll get a general hourly rate that you will measure potential business by. If your expected time on a project will exceed the client’s budget, you should decline the business or find an alternative that suits both of you. More on that later.
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4. HOW DO I WANT TO GET THERE?
The wrong approach:
Deciding on a general area of photography and seeing how the wind blows from there. Whatever client walks in the door will suffice.
Why it’s so important:
That wrong-headed approach might be fine for a photographer who’s at the very, very start of his or her creative journey and is trying to find the sweet spot where interest meets consumer demand. But as a long-term business strategy, it leaves a lot to be desired.
Here’s how this generally focused approach can fail: Let’s say you have a broad-based business, yet you really covet the $10,000 sale — it’s the amount that really equals success to you (see previous section). You’ll run into huge problems meeting your goal if you:
are uncomfortable around people who are likely to spend that much. You’d try your best if they walked in the door, but it’s not where you shine.
cannot fathom saying out loud (at an in-person sales appointment, which would almost certainly be required for these types of sales), “The total for these portraits is $10,000 — how would you like to take care of that?”
are pricing yourself to draw in the $100 sales also. Those aren’t the prices the high-end clients expect for the level of service they want. They probably will look elsewhere.
Now let’s focus on just the amount of the sale — $10,000 — for a moment. There are many roads that will get you to $10,000. Sorting clients in the most general terms, you could get $10,000 in revenue from:
Those high-end customers who expect a very time-intensive, hands-on approach with highly customized products, and they’re willing to lay down the money to get that special treatment. (One or two of these customers would be necessary to meet your sales goal.)
More casual clients who don’t demand as much — but don’t pay quite as much either — yet still value the personal interaction. (Some of these would be necessary.)
Economy clients who want simple service, inexpensive products, and quick turnaround. (Lots of these.)
Each of these groups responds to a different style of marketing and service. If you attempt to court all of them at once, you will be overwhelmed and frustrated. However, if you have a particular comfort or talent working with one of these groups, you can and should take steps to make that group your primary revenue base.
You will end up being a happier photographer, a more confident salesperson and you’ll give your business greater longevity — you will want to keep going because you connect with your clients, and you’ll be able to keep going because you’re profitable.
What I want you to do:
Take some time to consider the work experience you are most comfortable having. When things are going great at work, what does that look like?
How many shoots are you doing in a day?
What kind of people are on the schedule?
Does the client interaction involve slower, leisurely chats? Or are people moving in and out quickly?
What kinds of things are you selling with enthusiasm?
What is the dollar range of the sale you are most comfortable making?
Now let’s narrow the focus a bit more. Form a picture in your mind of your favorite kind of client —who you are happiest to be around and think is the easiest to talk to. Write down a brief description of what that group is like, generally speaking. Do they need lots of attention or are they more likely to be hands-off? What do they like to do in their spare time? What do you think motivates them? Saving money? Having status?
The answers to these questions will form the basis of your action plan for how to get more of those people in the door. There’s tons of information elsewhere about creating marketing plans. Right now we’re just trying to get your mind to your happy place so you can describe what it looks like, and eventually make your workdays look more like that!
5. WHAT DO I DO ABOUT THE ACTUAL PRICE LIST?
The wrong approach:
Thinking of every possible cool thing that could be offered (even the really bizarre stuff), slapping a price on it, and typing up the price changes on a handy sheet. And finally, counting on being able to talk through it with clients at the appointment.
Why it’s so important:
The price list itself is filled with powerful juju. It creates emotional reactions in clients.
A simple, easy-to-read price list can soothe worried clients, not to mention is a great conversation starter for a productive sales appointment. Overloaded price lists with too many options can create feelings of anxiety and wariness. It’s too much to process at once and clients worry that they’re missing something.
And this is all happening at the start of the experience, or when they first click onto the ordering page. Remember: What clients see at the beginning will make a huge difference in the payment you get at the end.
With a little advance planning and good technique, you can have a tool that will:
let clients to easily see all of the offerings they are most likely to buy, and then allow you to easily add more as they go.
help you give your clients superior customer service without having to give in to unprofitable requests.
increase the average dollar amount of your sales.
dramatically reduce the number of people who walk out the door to “think about it.”
make special requests worth your while — make you able to say yes — without being taken advantage of.
What I want you to do:
There are so many ways to handle the ordering process that it’s hard to cover them all here. In fact, this is one of the areas I spend a long time covering when I do coaching for individual businesses. It’s tough!
One General Strategy
I’ll let you do the outside research on the various options (my free pricing booklet has more information about good approaches and pitfalls to avoid). A lot of your pricing strategy will depend on your target market. However, here’s a simple, general strategy for getting started if you’re overwhelmed at the prospect of re-doing your price lists.
Do some research: Find out the items people buy from you most often. Don’t guess; look at the data! Divide those up by price and set up packages based on that. You’re looking for enough items to create 3-5 packages at different levels.
Create your basic packages: Include those popular items (taking care not to load the most popular items in the lowest tier), but allow for a limited amount of customization with add-ons. What you’re looking for are combinations where familiar items are highly visible, but there’s room for customizing in a way that won’t kill your profit.
Load special services on higher-end packages: Does someone wants extra retouching? No problem! (“Sure! That’s offered in our ABC package you see there!”)
Create your add-on lists: Take all the items that don’t make the “most popular” list and divide them up into add-on lists, separate from all your package information. Some list titles might include, “Affordable Gift Ideas”, “Creating a Legacy Wall Art Collection”, or “Unique Custom Gifts.”
Format ordering “menus” with lots of eye-friendly white space, which also means lots of space for clients to make notes in the margins about other things they want. Remember, keep the add-ons separated out.
Use Pricing to Keep Everyone Sane and Propel Your Business
Here again, there are numerous options to go forward with the actual pricing lists. Whichever way you decide to go, remember these tips:
Keep your lists simple: people will walk away if there’s too much information to process, or they’ll order only the most basic items, which would shortchange your potential sale.
Know your list thoroughly: the better you know your offerings, the more quickly you can recommend a substitute if someone is making a profit-draining request. (“What you’re asking for sounds a lot like this item here. We could use that as your add-on for the XYZ package we offer!”)
Keep sweeping changes to a minimum, and try to make them on a regular schedule (e.g., at the same time yearly). Remember, clients love predictability. The more familiar they are with your price lists and business cycles, the easier you are to buy from.
6. WHAT DO I DO GOING FORWARD?
The wrong approach:
Implementing the plan, then changing it a bunch of times. Worrying constantly that people won’t like your new plan, and feeling bad that you “changed the deal” on your clients.
Why it’s so important:
It’s a delicate balance. If you have been a time-donor so far (not paying yourself anything or seriously short-changing yourself), some percentage of clients have been the recipients of your generosity, and they are unlikely to want that sweet deal to end. That’s understandable, but it’s in the best interest of your business to let them go. After all, you need to stay in business in order to serve your other clients and meet the needs of your family.
On the other hand, a shocking change — like a dramatic price increase or a different business model – will put all of your long-term customers (including the ones you want to keep) in a position where they are no longer sure of what to expect, if only temporarily, when they do business with you. It’s good to acknowledge that the future of your business is going to look different than in the past, but that’s ultimately a great thing and you hope they stick with you to see the excitement unfold.
What I want you to do:
Accept that change is hard, but it needs doing! As a general rule, people resist change. This is true of photographers as well as clients. In fact, most photographers I’ve talked to find the idea of continuing to be unprofitable – and even working for free – easier than the prospect of presenting changes to clients. Nervousness is normal, but if you approach this change with enthusiasm and confidence (even faked confidence will do), your attitude will convey to others.
Learn to say no to the business that’s better off somewhere else. If the potential client isn’t interested in paying enough to meet your expenses (including paying yourself), it’s worthwhile to refer them to a more economical photographer. Kindly!
Know that your time and talent are worth something, but prepare to defend it graciously. Have some self-assured answers planned for when you get challenged on your prices. This happens to every single business owner and it will happen to you. (One example of a good response: “For $700, I can’t imagine getting a more meaningful piece of art to hang on your wall. I love hearing families tell me how they’re looking forward to passing along that art to their kids and grandkids someday!”)
All told, you probably won’t lose as many clients as you worry you will. If you offer great service, meet people’s expectations, and project confidence, people often see that value extends beyond price alone. Prices change, but confidence is remembered.
Be Confident it will work
I vividly remember one day, years ago, when I sent my husband and kids off to the zoo but I could not go with them. I had committed to projects that weren’t worth my time and didn’t give our family anything in return. I ended up bawling the afternoon away because I was missing out on the best part of my life, and I had little to show for it.
Fast forward to today and I have done the hard work I’ve told you about here: I set prices that reflected the value of my time and talent. I changed my business model to support my family’s goals. I adjusted my pricing to accommodate my selling style and my clients’ buying style. I stood by my changes through a tough adjustment period. Today, I don’t worry about my pricing. My clients have come to depend on it. My family and my employees’ families are sustained by it, and I am confident that it’s working.
I know that I’ve asked you to do some tough work here, and I have other information if you need more help along the way at http://www.joyvertz.com. In the meantime, I assure you that this is the kind of effort that produces wonderful changes — ones that you will be so glad you made. What I wish for you is what I’ve found myself, after doing all the hard work: peace. It’s worth the work, I promise!
Free Pricing Strategies
- Six Lessons Learned the Hard Way -
When I started my business 10 years ago I struggled with pricing strategies and made some costly mistakes. These mistakes ended up causing THOUSANDS of dollars to be left on the table.
In this free Pricing for Profit 15 page workbook, I have broken down some of the mistakes I have made over the years and how to overcome them to be on your way to being MORE PROFITABLE and make more money!
Free 15 Page Download
Photo credit: Vikram Raghuvanshi